Following is the unofficial transcript of a CNBC interview with Former Prime Minister of Greece George Papandreou today on CNBC’s “Squawk on the Street.” Following is a link to the video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000096958.

All references must be sourced to CNBC.

CARUSO-CABRERA: DAVID, FEEL FREE TO WEIGH IN ON THIS INTERVIEW IF YOU WANT, WE'RE JOINED BY GEORGE PAPANDREOU HE IS THE FORMER PRIME MINISTER OF GREECE HERE ON THE BALCONY IN FRONT OF THE PARLIAMENT MR PRIME MINISTER THANK YOU SO MUCH FOR JOINING US. YOUR PARTY CAME IN THIRD, IT GOT HIT PRETTY HARD. STILL HOW DO YOU FEEL ABOUT THE OUTCOMES OF THE ELECTIONS AND NEW DEMOCRACY COMING IN FIRST.

PAPANDREOU: FIRST OF ALL, I’VE ALWAYS FELT THAT POLITICS IS TO SERVE YOUR COUNTRY. I HAD A LOT OF POLITICAL COSTS PERSONALLY BUT I DID IT FOR GREECE, AND I DO BELIEVE GREECE REALLY CAN CHANGE WE HAVE GREAT POTENTIAL AND THE VOTE YESTERDAY WILL OPEN UP I BELIEVE A GOVERNMENT OF A COALITION WHICH IS PRO EUROPEAN, AND WE’LL CONTINUE MAJOR REFORMS WE NEED TO MAKE IN ORDER TO MAKE OUR ECONOMY VIABLE.

CARUSO-CABRERA: WHAT DOES IT SAY ABOUT GREECE WANTING TO STAY IN THE EURO? DOES IT SAY ANYTHING?

PAPANDREOU: I THINK IT'S QUITE CLEAR THAT GREEKS DO WANT TO STAY IN THE EURO. THIS HAD BEEN SO EVEN BEFORE THE ELECTIONS, BUT THEY ALSO I THINK SEE THERE'S A VOICE OF REASON THAT YES, WE NEED TO STAY IN THE EURO, BUT WE ALSO NEED TO WORK WITHIN AN AGREEMENT WHICH WE HAVE SIGNED. WE WANT TO HONOR THE SIGNATURES WE HAVE MADE WITH OUR PARTNERS IN THE EUROPEAN UNION THE BAILOUT AGREEMENT, AND THAT IS ALSO TO MAKE GREECE MUCH MORE VIABLE AND JUST COUNTRY.

CARUSO-CABRERA: TELL ME ABOUT WHAT CHANGES, IF ANYTHING, SHOULD HAPPENED WHEN IT COMES TO THE BAILOUT AGREEMENT NEW DEMOCRACY HAS MADE THEY ARE GOING TO GO TO THE EUROPEAN UNION AND TRY TO DO SOME FORM OF RENEGOTIATION. IF YOU WERE DOING THAT, WHAT WOULD YOU ASK FOR?

PAPANDREOU: WELL, ONE THING I SAID FROM THE VERY BEGINNING, AND I THINK THIS IS WHAT THE GOVERNMENT WILL HAVE TO SAY WAHTEVER GOVERNMENT IS FORMED, WE HAVE TO PRIORITIZE. WE HAVE PUT TOO MUCH WEIGHT ON THE AUSTERITY SIDE TO CUT THE DEFICITS, WHILE IN FACT WE HAVE A COUNTRY WHICH IS NOT POOR, BUT IT WAS POORLY MANAGED. WE NEED TO REORGANIZE IT, RESTRUCTURE IT. IT'S LIKE A COMPANY THAT HAD BEEN PRODUCING THINGS THAT WEREN'T COMPETITIVE. NOW WE HAVE TO REORGANIZE OUR ECONOMY THAT TAKES TIME. REFORM OUR TAX SYSTEM AND REFORM OUR CIVIL SERVICE. WE HAVE MADE MAJOR REFORMS ALREADY, BUT WE STILL NEED TO TAKE THIS FORWARD. IT TAKES SOME TIME, IT TAKES UNDERSTANDING, AND WE NEED A LITTLE MORE TIME SO THAT AUSTERIITY DOESN'T HIT AS HARD AS IT HIT. WE SHOULD ALSO HAVE A SUPPLEMENTAL PROGRAM FOR GROWTH.

CARUSO-CABRERA: A YEAR AGO YOU SUGGESTED A REFERENDUM ON WHETHER OR NOT GREECE SHOULD STAY IN THE EURO. THE EUROPEAN UNION WENT BERSERK, THEY THOUGHT YOU WERE CRAZY, THEY THOUGHT IT WAS A TERRIBLE IDEA, YOU WERE SHUT DOWN. SHOULD THEY HAVE LET THAT REFERENDUM HAPPEN BACK THEN?

PAPANDREOU: I BELIEVE WE SHOULD HAVE ALLOWED A REFERENDUM TO HAPPENED. A REFERENDUM WOULD HAVE MEANT THAT THE GREEKS WOULD HAVE DECIDED DO YOU ACCEPT THIS PACKAGE AND STAY IN THE EURO OR DO YOU NOT ACCEPT THIS PACKAGE AND EXIT THE EURO? I THINK WE WOULD HAVE HAD A RESOUNDING YES, BUT THIS JUST SHOWS THAT EUROPE ALSO HAS TO REALIZE THAT IT CANNOT BE A PROJECT OF THE ELITES WHETHER THEY’RE POLITICAL OR ECONOMIC ELITES, IT HAS TO BE A PROJECT FOR THE CITIZENS. HAD WE HAD THAT REFERENDUM, I DON'T BELIEVE WE WOULDN’T HAVE GONE THROUGH THE TURMOIL OF THE NEXT MONTHS. IT IS STILL OF COURSE IS OPEN IN THE FUTURE. THERE MAY BE A DISCUSSION AGAIN ABOUT A REFERENDUM, BUT I BELIEVE WE NEED TIME TO THIS GOVERNMENT NOW TO START IMPLEMENTING THE POLICIES AND SEE HOW WE CAN FIND THE SPACE TO AMELIORATE THE SHARPER EDGES OF SOME OF THIS VERY DIFFICULT PROGRAM PARTICULARLY ON THE AUSTERITY SIDE.

CARUSO-CABRERA: THE "NEW YORK TIMES" WROTE AN ARTICLE VERY CRITICAL OF YOUR FATHER, THAT WHEN HE WAS PRIME MINISTER HE BUILT THE PATRONAGE SYSTEM THAT'S SO FAMOUS AND NOW SO CRITICIZED IN GREECE, AND THAT IT WAS YOUR JOB TO DISMANTLE IT AND PERHAPS YOU SHOULD HAVE DONE MORE. HOW DO YOU FEEL ABOUT THAT WHOLE NARRATIVE?

PAPANDREOU: FIRST OF ALL, I HAVE BEEN A MAJOR OPPONENT OF THE PATRONAGE STATE SINCE I WAS ELECTED MANY YEARS AGO, AND THESE LAST TWO YEARS -- I'VE HAD TWO YEARS IN OFFICE, I FOUGHT IT BRINGING MERITOCRACY EVERYWHERE BRINGING COMPLETE TRANSPARENCY IN OUR DECISION,

EVERY EURO SPENT IN GREECE IS ONLINE. WE HAVE BEEN FIGHTING CORRUPTION, FIGHTING CLIENTELISM BUT MY FATHER WAS NOT THE ONE WHO CREATED THE CLIENTELISTIC SYSTEM THE CLIENTELISTIC SYSTEM UNLUCKILY WAS THERE MANY MANY ACTUALLY GENERATIONS AGO, BUT PARTICULARLY AFTER THE COLD WAR, I WOULD SAY WE HAD A VERY CONSERVATIVE GOVERNMENT, AND AFTER THE COLD WAR, WE DIDN'T CHANGE -- WE DIDN'T GO THROUGH THE GLASNOST OR PERESTROIKA THAT THE OTHER COUNTRIES WENT THROUGH IN CENTRAL AND EASTERN EUROPE. OUR STATE REMAINED CLIENTELISTIC. AND THIS IS WHAT WE HAD TO CHANGE. ACTUALLY, I BELIEVE THE BASIC PROBLEM IN GREECE IS NOT THAT PROFLIGACY, NOT THAT WE HAVE A BIG SOCIAL SYSTEM. IT IS THAT WE DON'T HAVE A STATE THAT'S WELL RUN. IT'S A STATE WHERE WE NEED TO CREATE, WHICH IS TRANSPARENT, WHICH IS EFFICIENT WHICH IS HELPFUL TO LIBERATING THE POTENTIAL OF THE GREEKS BECAUSE GREEKS HAVE GREAT POTENTIAL. YOU KNOW THE GREEK DIASPORA IN THE UNITED STATES AND OTHER PARTS OF THE WORLD VERY HARD WORKING AND CREATIVE PEOPLE BUT WE NEED TO HAVE THE RIGHT ENVORONMENT. THIS IS WHAT WE HAVE TO CHANGE. THIS IS WHAT WE WILL MOVE AHEAD TO DO I BELIEVE IN THE NEXT GOVERNMENT ALSO.

CARUSO-CABRERA: SIMON HAS A QUESTION FOR YOU AS WELL.

HOBBS: YES I HOPE YOU CAN HEAR ME. WHAT WE NEED WHAT WORLD MARKETS NEED IS NOW A COALISTION GOVERNEMNT THAT CAN HANG TOGETHER AND THAT CAN MAKE SOME VERY TOUGH DECISIONS FOR GREECE NOW YOU ARE THE THIRD PARTY. IS IT OK IF THAT COALITION GOVERNEMENT IS LED BY THE PRESENT LEADER OF THE LARGEST PARTY ANTONIS SAMARAS BECAUSE THERE IS A VIEW THAT HE IS TOO DIVISIVE. THAT HE IS A STREET FIGHTER AND HE CANNOT KEEP YOUR PARTY AND OTHER MEMBERS OF THE POLITICAL ELITE ON BOARD. CAN SAMARAS DO THE JOB OR DO YOU NEED ANOTHER MAN AS PRIME MINISTER NOW?

PAPANDREOU: FIRST OF ALL, THIS IS A QUESTION OF NEGOTIATIONS THAT ARE ONGOING RIGHT NOW AS FAR AS WHO MIGHT BE THE PRIME MINISTER. BUT IN THE END THE PROOF WILL BE IN THE PUDDING. BUT I BELIEVE THE GREEK PEOPLE HAVE SAID WITH THEIR VOTE WE WANT TO SEE NOT ONE PARTY TO RULE WE WANT TO SEE A COALITION. A COALITION WHERE WE BRING DIFFERENT PARTIES TOGETHER WHERE DIFFERENT VIEWS, IF YOU LIKE, DIFFERENT POLITICAL TRADITIONS COME TOGETHER FOR A NATIONAL PURPOSE AND THE NATIONAL PURPOSE IS TO SAVE OUR COUNTRY, TO CHANGE OUR COUNTRY, TO MAKE OUR COUNTRY VIABLE. TO GROUW OUR COUNTRY TO BE PROUD OF WHAT WE CAN BE. GREECE HAS GREAT POTENTIAL WE HAVE GREAT TOURISM WHICH CAN DEVELOP WE HAVE A BRAND NAME IN AGRICULTURE. WE HAVE SHIPPING WHICH IS GOOD WE HAVE FISHING FARMS NUMBER ONE IN EUROPE WE HAVE GREEN ENERGY WHICH WE WANT TO DEVELOP SUN ENERGY ALL THE THINGS WE CAN DEVELOP. THIS GOVERNMENT MUST STEP UP TO THE MANTLE AND MAKE THIS HAPPEN.

HOBBS: SO IN ANSWER TO MY QUESTION, CAN SAMARAS LEAD A COALITION GOVERNMENT, OR WILL YOUR PARTY BE ASKING FOR A DIFFERENT MAN TO BE PRIME MINISTER AND CAN WE GET A COALITION GOVERNMENT UNTIL THAT IS SORTED OUT?

PAPANDREOU: I WOULDN'T WANT TO GET INTO THE DETAILS OF THE NEGOTIATION, WHICH ARE ONGOING RIGHT NOW. WE NEED TO SEE HOW MANY PARTIES WE CAN GET TOGETHER. HOPEFULLY MORE THAN TWO.THREE, MAYBE FOUR BUT I WOULD SAY THREE. AND OF COURSE THEY WOULD ALL HAVE TO AGREE ON WHO WOULD BE THE LEAD MAN IF YOU LIKE THE PRIME MINISTER OF THIS COUNTRY BUT I THINK IN THE END SECONDARY TO

THE FACT THAT WE HAVE TO HAVE A COMMON PROGRAM OF MAKING THE FORMS AND MOVING FORWARD AND MAKING SURE GREECE BECOME A VIABLE COUNTRY. I JUST WANT TO ADD SOMETHING TO THIS HOWEVER GREECE WILL TAKE ON ITS RESPONSIBILITIES AND I BELIEVE THIS. HOWEVER WE ARE ALSO LIVING A CRISIS OF THE EURO. GREECE HAS LIVED THE UNCERTAINTY THE LAST TWO YEARS OF WHETHER WE WILL BE INSIDE OR OUTSIDE THE EURO. NOW WE ARE SEEING A CRISIS IN SPAIN WITH THE BANKS AND ALSO WITH ITALY, IRELAND AND PORTUGAL ARE ALSO IN THIS BAILOUT PROGRAM. THIS MEANS THAT IT IS NOT GREECE THAT IS THE PROBLEM. GREECE HAS A PROBLEM BUT THE PROBLEM IS THE STRUCTURES OF EUROPE AND THE FACT THAT EUROPE RIGHT NOW DOES NOT HAVE GROWTH. THAT'S WHY I THINK THERE IS A MAJOR RESPONSIBLE FOR ALL US EUROPEANS TO POOL OUR EFFORTS AND GET BEYOND THE PETTY NATIONALISMS OF THE BAD GERMANS OR THE BAD GREEKS OR THE BAD SOUTHERNERS AND WORK TOGETHER TO CREATE ISSUES LIKE THE POSSIBILITY SUCH AS EURO BONDS OR MUTUALIZING THE RISKS IN THE BANKING SYSTEM. MORE COMMON ECONOMIC POLICIES FROM TO TAX TO LABOR LAWS THIS IS WHAT WE NEED TO MAKE A COHERENT AND CONFIDENT EUROPE AND ALSO CREAT THE NECESSARY CONFIDENCE IN THE MARKETS THAT THEY KNOW THAT EUROPE IS A PROJECT THAT WILL SUCCEED THE EURO IS A PROJECT THAT WILL SUCCEED.

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